As filed with the Securities and Exchange Commission on ________, 1999
Registration No. 33-25900
U.S. Securities and Exchange Commission
Washington, D.C.
--------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DONNEBROOKE CORPORATION
(Exact name of small business registrant as specified in its charter)
Delaware 75-2228820
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 (972) 248-1922.
(Address and telephone number of principal executive offices)
Kevin B. Halter, Jr. 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248
(972) 248-1922
( Name, address and telephone number of agent for service)
Copies to:
Richard Braucher, Esq.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of each class of Amount to be Proposed maximum offering Proposed maximum Registration Fee
securities to be registered registered price per share (1) aggregate offering
price (1)
Common Stock 3,602,300 shares $0.01 $36,023.00 $11.00
- ---------------------------- ------------------------- -------------------------- ------------------------- ------------------------
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Note: (1) Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PRELIMINARY PROSPECTUS
(subject to completion)
DONNEBROOKE CORPORATION
3,602,300 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale from time to time of up to
3,602,300 shares of the common stock, with a par value of $.00001 per share, of
Donnebrooke Corporation, a Delaware corporation (herein "Donnebrooke"), by two
current shareholders (See "Prospectus Summary"). The 3,602,300 shares of
Donnebrooke's common stock were acquired as restricted securities in exchange
for services performed for Donnebrooke by these two shareholders and in
consideration of paying bills that Donnebrooke owed to third parties.
Donnebrooke is registering these shares in order to provide these two
shareholders with freely tradeable securities, but the registration does not
necessarily mean that any or all of these shares will, in fact, be sold.
Donnebrooke will not receive any of the proceeds from the sale of these shares.
Donnebrooke will pay all of the expenses related to this registration.
There is currently no public market for the common stock. Donnebrooke expects
that the common stock will be traded on the over-the-counter market maintained
by members of the National Association of Securities Dealers, Inc. (the "OTC
Bulletin Board") after the registration statement is declared effective.
After the Shares are registered these two shareholders may, from time to time,
offer and sell the Shares directly or through agents or broker-dealers on such
terms as they in their individual discretion determine to be appropriate. Each
of these two shareholders reserves the right to accept or reject, in whole or in
part, any proposed purchase of the shares.
---------------------------
An investment in the securities offered hereby is speculative and involves
a high degree of risk. You should read "Risk Factors", beginning on page 3,
which describes certain factors which should be carefully considered before you
purchase any of the common stock.
-------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July ___, 1999.
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Donnebrooke and the common stock covered by this
registration and Donnebrooke's financial statements and notes thereto appearing
elsewhere in this prospectus.
THE COMPANY
Donnebrooke Corporation, a Delaware corporation, does not conduct any type of
business at this time. Donnebrooke was incorporated under the laws of State of
Delaware in 1988. Donnebrooke's only office is located at 16910 Dallas Parkway,
Suite 100, Dallas, Texas 75248 and its telephone number is (972) 248-1922.
SECURITIES TO BE REGISTERED
3,602,300 shares of Donnebrooke's common stock (the "Shares"), including
1,313,000 shares that are owned by Halter Capital Corporation and 2,289,300
shares that are owned by Kevin B. Halter, Jr. (herein, collectively, the
"Selling Shareholders") are being registered and may be offered for sale, from
time to time, in the future. These Shares represent more than 99% of the number
of issued and outstanding shares of the common stock.
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered by prospective investors in evaluating Donnebrooke
and its business and future prospects before purchasing any of the common stock.
No History of Operations
Donnebrooke has never operated any business and has never generated any income;
thus, Donnebrooke has no history of successfully operating any form of business
and generating any profits.
Donnebrooke Needs Additional Capital
In the past Donnebrooke's expenses have always been paid by one or more of its
principal shareholders. Currently it has no cash and no assets with which to pay
any expenses. Unless one or more of its shareholders provides cash to pay
Donnebrooke's expenses as they are incurred, Donnebrooke may be forced to cease
its efforts to find an acceptable merger or acquisition partner. There are no
known sources from which Donnebrooke can obtain loans or debt financing.
Risks Related to Donnebrooke's Acquisition Strategy
Donnebrooke intends to grow by acquiring a business or a corporation that is
privately owned and has a history of profitable operations. The management of
Donnebrooke has no specific target in mind and it is impossible to predict when,
or if, it will find a merger of acquisition candidate that it deems desirable
and that is interested in affiliating with Donnebrooke. There can be no
assurance that Donnebrooke will be able to identify, acquire or manage such a
business profitably or to integrate successfully such a business into
Donnebrooke without substantial and unanticipated costs, delays or other
problems. A business acquired by Donnebrooke may have liabilities that
Donnebrooke does not discover or may not be able to discover during its
pre-acquisition investigations and for which Donnebrooke, as legal successor
owner, may be responsible. Donnebrooke currently has no agreement with any party
to make an acquisition.
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Control of Donnebrooke by its Executive Officers and Directors
Donnebrooke's officers and directors currently beneficially own, directly or
indirectly, over 99% of the common stock. As a result, these shareholders acting
together control all decisions that will be made by the shareholders, including
the election of directors, approval or rejection of any proposed acquisition or
merger, and possible recapitalizations of Donnebrooke. The voting power of these
shareholders could, under certain circumstances, delay or prevent a change in
control of Donnebrooke.
Benefits of this Offering for Two Shareholders
The two Selling Shareholders currently, directly or indirectly, own more than
99% of the common stock, namely, 3,622,464 of the shares issued and outstanding.
Of this number, 3,602,300 shares are covered by this registration. After this
registration is declared effective by the SEC, the Selling Shareholders will be
able to sell any or all of these shares and will not be subject to volume
restrictions of SEC Rule 144 that would otherwise apply if this registration
statement had not been filed. There can be no assurances that these two Selling
Shareholders will, in fact, sell or retain all or any part of these shares, or,
if so, when.
There is No Active Market for Donnebrooke's Common Stock Now
Until this time there has not been a public market for Donnebrooke's stock.
There can be no assurance that an active public market will develop or be
sustained for the common stock even though Donnebrooke intends to file an
application with the National Association of Securities Dealers, Inc. (herein "
NASD") to list the common stock on the OTC Bulletin Board. If there is little
demand on the part of potential purchasers of the stock, sellers will have
difficulty selling any of Donnebrooke's stock.
Anticipated Volatility of the Price of Donnebrooke's Stock
The market price of Donnebrooke's stock has been, and is likely to continue to
be, highly volatile. The market for Donnebrooke's stock may continue to be
volatile because of general market conditions, as well as factors related to
Donnebrooke's performance and its ability to meet market expectations. Such
factors as investor perceptions of Donnebrooke, variations in Donnebrooke's
financial results, announcements regarding Donnebrooke's plans and other
developments affecting Donnebrooke's future could cause significant fluctuations
in the market price of the stock. In addition, the stock market in general has
recently experienced price and volume fluctuations which appear to be unrelated
to the operating performance of individual companies. Broad market fluctuations
may adversely affect the market price of the stock.
There are a Very Large Number of Shares Eligible for Sale in the Future; Sales
of Donnebrooke's Shares May Depress the Price of its Stock
If the two Selling Shareholders sell substantial amounts of the common stock in
the public market following this offering, the market price of the common stock
could fall. These sales might make it more difficult for Donnebrooke to sell
equity securities in the future at a time and at a price deemed appropriate.
Upon completion of this offering and the approval of Donnebrooke's application
for listing with NASD all of Donnebrooke's issued and outstanding shares of
common stock will be freely tradeable.
Potential Anti-takeover Provisions of Donnebrooke's Certificate and Bylaws, as
well as Delaware Law, Could Adversely Affect the Stock's Price
Certain provisions of Delaware law and certain provisions of Donnebrooke's
Certificate of Incorporation and Bylaws could delay or impede the removal of
incumbent directors and could make it more difficult for a third party to
acquire, or could discourage third parties from attempting to acquire, control
of Donnebrooke. Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of Donnebrooke's common stock.
The Certificate and Bylaws impose various procedural requirements that could
make it more difficult for shareholders to effect certain corporate actions.
Donnebrooke's Certificate gives the Board of Directors (without any additional
authorization from the shareholders) authority to issue more than 46,000,000
additional shares of common stock for various corporate purposes. Issuance of a
substantial number of shares would dilute the existing shareholders' percentage
ownership of Donnebrooke.
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REGISTRATION PLAN
Reasons for the Registration
Donnebrooke's Board of Directors has determined that it is in the best interest
of all of Donnebrooke's shareholders to register the Shares at this time. After
the completion of this registration all 3,640,372 shares of Donnebrooke's Common
stock will be freely tradeable, whereas currently only 38,072 shares are now
freely tradeable. Immediately after this registration is declared effective,
Donnebrooke intends to apply to the NASD for listing of the Common stock on
NASD's OTC Bulletin Board and it is anticipated that trading should commence
shortly after approval is received from NASD.
In addition, Donnebrooke hopes to expand by means of acquisitions of existing
businesses (although at the present time none are specifically contemplated) and
the Board of Directors believes that having a public market for the common stock
will allow Donnebrooke to more readily make such acquisitions in the future by
structuring them as stock transactions.
Listing and Trading of the Common Stock in the Future
Donnebrooke expects that the common stock will initially be traded on the OTC
Bulletin Board after the effectiveness of the registration statement. Shares of
the common stock will be freely transferable, except for shares received by
persons who may be deemed to be "affiliates" of Donnebrooke under the Securities
Act. Persons who may be deemed to be affiliates of Donnebrooke include
individuals or entities that control, are controlled by or under common control
with Donnebrooke, and may include directors and principal executive officers of
Donnebrooke, as well as any stockholder owning 5% or more of the total stock
issued and outstanding. Persons who are affiliates of Donnebrooke will be
permitted to sell their shares of common stock only pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act which is applicable to them. In
addition to the directors and executive officers of Donnebrooke (See
"Management"), Halter Capital Corporation is currently an affiliate of
Donnebrooke.
Donnebrooke currently has approximately 970 shareholders.
DESCRIPTION OF DONNEBROOKE'S COMMON STOCK
Donnebrooke's Certificate of Incorporation authorizes the issuance of 50,000,000
shares of common stock, with a par value of $.00001 per share. Holders of common
stock are entitled to one vote for each share owned on each matter submitted to
a vote of the shareholders. Currently there are 3,640,372 shares of common stock
issued and outstanding. Donnebrooke's Board of Directors has the legal authority
to issue the remaining unissued authorized shares, without shareholder approval,
for any purpose deemed to be in the best interest of Donnebrooke. Shares could
be issued to deter or delay a takeover or other change of control of
Donnebrooke.
All the shares of the common stock which are now outstanding are fully paid,
validly issued and nonassessable and the holders of the common stock have no
preemptive rights to subscribe for or to purchase any additional securities
issued by Donnebrooke. Upon liquidation, dissolution or winding up of
Donnebrooke, the holders of common stock are entitled to share ratably in the
distribution of assets after payment of debts and expenses. There are no
conversion, sinking fund or redemption provisions, or similar restrictions with
respect to the common stock.
Holders of the common stock are entitled to receive dividends, when and if
declared by the Board of Directors, out of funds legally available therefor. See
"Dividend Policy,"
Dividend Policy
Donnebrooke has never paid or declared a cash dividend on its common stock and
does not intend to pay cash dividends in the foreseeable future. The payment by
Donnebrooke of dividends, if any, on its common stock in the future is subject
to the discretion of the Board of Directors and will depend on Donnebrooke's
earnings, financial condition, capital requirements and other relevant factors.
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Use of Proceeds
Donnebrooke will not receive any proceeds from the registration or sale of the
shares of common stock covered by this prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
The following discussion and analysis should be read in conjunction with
Donnebrooke's financial statements and the notes associated with them as set
forth elsewhere in this document. This discussion should not be construed to
imply that the results discussed herein will necessarily continue into the
future or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. This discussion represents only the best
present assessment by the management of Donnebrooke.
Caution Regarding Forward-Looking Information
This registration statement contains certain forward-looking statements and
information relating to Donnebrooke that are based on the beliefs of Donnebrooke
or its management as well as assumptions made by and information currently
available to Donnebrooke or its management. When used in this document, the
words "anticipate", "believe", "estimate", "expect" and "intend" and similar
expressions, as they relate to Donnebrooke or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
Donnebrooke or its management regarding future events and are subject to certain
risks, uncertainties and assumptions, including the risks and uncertainties
noted. Should one or more of these risks or uncertainties materialize, or should
the underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated, expected or
intended. In each instance, the forward-looking information should be considered
in light of the accompanying meaningful cautionary statements herein.
Company's History
Donnebrooke Corporation was incorporated under the name, Alluristics, Inc., on
April 19, 1988 under the laws of the State of Delaware. In 1988 Donnebrooke
filed a Form S-1 Registration Statement under the Securities Act of 1933,as
amended, (which was declared effective February 15, 1989), covering 5,000,000
shares of its common stock. Later in 1989 the Allison family of Houston, Texas
acquired a controlling interest in Donnebrooke. Over the years there were a
number of stock issuances, in addition to stock splits. On October 16, 1998
Halter Capital Corporation acquired 19,490,735 shares of Donnebrooke's common
stock (representing approximately 52% of the number of shares then issued and
outstanding). Subsequently Donnebrooke's shareholders approved a one for 1000
reverse split of the common stock. This action decreased the number of issued
and outstanding shares of common stock from 37,333,000 to 38,072 as of the
effective date. On March 15, 1999, Donnebrooke issued 1,313,000 shares of its
common stock to Halter Capital Corporation which had paid certain debts of
Donnebrooke owing to its creditors and 2,289,300 shares of its common stock to
Kevin B. Halter, Jr. for services which he had previously rendered as a
consultant for Donnebrooke.
Discussion of Financial Condition
Donnebrooke currently has no revenues, no operations and owns no assets.
Donnebrooke will remain illiquid until such time as a business combination
transaction occurs, if ever. No prediction of the future financial condition of
Donnebrooke can be made.
Due to the lack of sustaining operations from inception, Donnebrooke is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$151,000 that were extinguished in March 1999 when Donnebrooke issued 3,602,300
shares of restricted stock to two shareholders. Accordingly, Donnebrooke is
dependent upon its current management and/or significant shareholders to provide
sufficient working capital to preserve the integrity of the corporation during
this phase.
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Donnebrooke's independent auditor, S.W. Hatfield, CPA, expressed, in its opinion
on Donnebrooke's audited financial statements, doubt about Donnebrooke's ability
to continue as a going concern. Reference is made to Note A to the financial
statements of Donnebrooke included elsewhere in this registration statement.
Plan of Business
General. Donnebrooke intends to locate and combine with an existing,
privately-held company which is profitable or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However,
Donnebrooke does not intend to combine with a private company that may be deemed
to be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of
Donnebrooke's common stock for stock or assets, or any other form that will
result in the combined enterprises becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, Donnebrooke anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should
Donnebrooke incur any significant liabilities prior to a combination with a
private company, it may not be able to satisfy such liabilities as they are
incurred.
If Donnebrooke's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust Donnebrooke's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, Donnebrooke's common stock will
become worthless and holders of Donnebrooke's common stock will receive a
nominal distribution, if any, upon Donnebrooke's liquidation and dissolution.
Combination Suitability Standards. In its pursuit for a combination partner,
Donnebrooke's management intends to consider only combination candidates that
are profitable or, in management's view, have growth potential. Donnebrooke's
management does not intend to pursue any combination proposal beyond the
preliminary negotiation stage with any combination candidate which does not
furnish Donnebrooke with audited financial statements for at least its most
recent fiscal year and unaudited financial statements for interim periods
subsequent to the date of such audited financial statements, or is in a position
to provide such financial statements in a timely manner. In the event such a
combination candidate is engaged in a high technology business, Donnebrooke may
obtain reports from independent organizations of recognized standing covering
the technology being developed and/or used by the candidate. Donnebrooke's
limited financial resources may make the acquisition of such reports difficult
or even impossible to obtain and, thus, there can be no assurance that
Donnebrooke will have sufficient funds to obtain such reports when considering
combination proposals or candidates. To the extent that Donnebrooke is unable to
obtain the advice or reports from experts, the risks of any combined
enterprise's being unsuccessful will be increased. Furthermore, to the knowledge
of Donnebrooke's officers and directors, neither the candidate nor any of its
directors, executive officers, principal shareholders or general partners:
<PAGE>
(1) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities, whether
as issuer, underwriter, broker, dealer, or investment advisor, may be the
subject of any pending investigation or a defendant in a pending lawsuit
arising from or based upon allegations of unlawful transactions in
securities; or
(3) will have been a defendant in a civil action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
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Donnebrooke's officers and directors will make these determinations by asking
pertinent questions of the management and/or owners of prospective combination
candidates. Such persons will also ask pertinent questions of others who may be
involved in the combination proceedings. However, Donnebrooke's officers and
directors will not generally take other steps to verify independently
information obtained in this manner which is favorable. Unless something comes
to their attention which puts them on notice of a possible disqualification that
is being concealed from them, such persons will rely on information received
from the management of the prospective combination candidate and from others who
may be involved in the combination proceedings.
BUSINESS
General
Donnebrooke Corporation was incorporated on April 19,1988 under the laws of the
State of Delaware. Later in 1988 Donnebrooke filed a registration statement
under The Securities Act of 1933, as amended, with the Securities and Exchange
Commission with respect to a distribution of its common stock to the
shareholders of Halter Venture Corporation, the corporation that was at that
time its parent. This distribution of Donnebrooke's common stock became
effective February 15, 1989. Donnebrooke had not yet engaged in any business
operations. The business purpose of Donnebrooke was to seek out and obtain an
acquisition, merger or outright sale transaction, whereby its shareholders would
benefit.
Early in 1989 Albert Ray Allison III and his family purchased control of
Donnebrooke. During 1989 and 1990 Donnebrooke attempted to enter into the
business of owning, operating and managing various parcels of real estate and to
own, operate and manage shared tenant service operations tailored predominately
for the legal profession and related professions. Donnebrooke was not successful
in initiating these operations. Accordingly, Donnebrooke has never had any
substantial operations or substantial assets since its inception.
Donnebrooke's corporate charter was revoked in 1992 by the State of Delaware for
failure to file required franchise tax reports and to pay franchise taxes. On
October 16, 1998 Halter Capital Corporation acquired a controlling interest in
Donnebrooke and the current Board of Directors was appointed by the previous
Board of Directors, who then resigned. On October 26, 1998, tax reports were
filed with, and franchise taxes were paid to, the State of Delaware and the
corporate charter was revived.
Thereafter Donnebrooke's new management caused Donnebrooke's SEC periodic
reporting to be brought current, including the filing of all required reports on
Forms 10-K or !0-KSB and 10-Q or !0-QSB covering the periods through March 31,
1999. These actions were taken in order that Donnebrooke might be potentially
more attractive to a private business that has an interest in becoming a
publicly-held company be means of merging or otherwise affiliating itself with
Donnebrooke.
Proposed Business
Donnebrooke intends to locate and combine with an existing, privately-held
company, which is profitable, or, in management's view, has growth potential,
irrespective of the industry in which it is engaged. However, Donnebrooke does
not intend to combine with a private company that may be deemed to be an
investment company subject to the Investment Company Act of 1940. A combination
may be structured as a merger, consolidation, exchange of Donnebrooke's Common
stock for stock or assets or any other form that will result in the combined
enterprise's becoming a publicly-held corporation.
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Pending negotiation and consummation of a combination, Donnebrooke anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should
Donnebrooke incur any significant liabilities prior to a combination with a
private company, it may not be able to satisfy such liabilities as they are
incurred.
If Donnebrooke's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust Donnebrooke's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, Donnebrooke's common stock will
become worthless and holders of Donnebrooke's common stock will receive a
nominal distribution, if any, upon Donnebrooke's liquidation and dissolution.
Combination Suitability Standards
In its pursuit for a combination partner, Donnebrooke's management intends
to consider only combination candidates which are profitable or, in management's
view, have growth potential. Donnebrooke's management does not intend to pursue
any combination proposal beyond the preliminary negotiation stage with any
combination candidate that does not furnish Donnebrooke with audited financial
statements for at least its most recent fiscal year and unaudited financial
statements for interim periods subsequent to the date of such audited financial
statements, or is in a position to provide such financial statements in a timely
manner. In the event such a combination candidate is engaged in a high
technology business, Donnebrooke may obtain reports from independent
organizations of recognized standing covering the technology being developed
and/or used by the candidate. Donnebrooke's limited financial resources may make
the acquisition of such reports difficult or even impossible to obtain and,
thus, there can be no assurance that Donnebrooke will have sufficient funds to
obtain such reports when considering combination proposals or candidates. To the
extent Donnebrooke is unable to obtain the advice or reports from experts, the
risks of any combined enterprise's being unsuccessful will be increased.
Furthermore, to the knowledge of Donnebrooke's officers and directors, neither
the candidate nor any of its directors, executive officers, principal
shareholders or general partners:
<PAGE>
(4) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(5) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities, whether
as issuer, underwriter, broker, dealer, or investment advisor, may be the
subject of any pending investigation or a defendant in a pending lawsuit
arising from or based upon allegations of unlawful transactions in
securities; or
(6) will have been a defendant in a civi1 action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
Donnebrooke's officers and directors will make these determinations by
asking pertinent questions of the management and/or owners of prospective
combination candidates. Such persons will also ask pertinent questions of others
who may be involved in the combination proceedings. However, the officers and
directors of Donnebrooke will not generally take other steps to verify
independently information obtained in this manner which is favorable. Unless
something comes to their attention that puts them on notice of a possible
disqualification that is being concealed from them, such persons will rely on
information received from the management of the prospective combination
candidate and from others who may be involved in the combination proceedings.
Properties.
Donnebrooke has no properties or assets of any kind.
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Legal Proceedings.
Donnebrooke is not a party to any pending litigation nor is it aware of
any threatened legal proceeding.
Employees.
Donnebrooke has no employees.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of Donnebrooke are as follows:
NAME AGE POSITION
Kevin B. Halter 63 President, Treasurer and Director
Kevin B, Halter, Jr. 38 Vice President, Secretary and Director
Kevin B. Halter has served as President, Treasurer and a director of Donnebrooke
since October 1998. Mr. Halter has served as Chairman of the Board and Chief
Executive Officer of Halter Capital Corporation, a privately-held investment and
consulting company, since 1987. Kevin B. Halter is the father of Kevin B.
Halter, Jr.
Kevin B. Halter, Jr. has served as Vice President, Secretary and a director of
Donnebrooke since October 1998. Mr. Halter also serves as Vice President and
Secretary of Halter Capital Corporation. He is the President of Securities
Transfer Corporation, a stock transfer company registered with the Securities
and Exchange Commission, a position which he has held since 1987. Kevin B.
Halter, Jr. is the son of Kevin B. Halter.
EXECUTIVE COMPENSATION
None of the officers and directors of Donnebrooke were compensated in any way
for their service to Donnebrooke during the fiscal years ended December 31, 1997
and 1998.
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information as of June 15, 1999 with
regard to the beneficial ownership of the Common stock by (i) each person known
to Donnebrooke to be the beneficial owner of 5% or more of its outstanding
shares; (ii) by the officers and directors of Donnebrooke individually and (iii)
by the officers and directors as a group.
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Name and Address of Beneficial Owner(1) Amount Owned Percent
Halter Capital Corporation 1,332,492 36.6%
Kevin B. Halter 604 0%
Kevin B. Halter, Jr. 2,289,368 62.9%
All Officers and Directors as a Group 2,289,972 62.9%
(Two Persons)
- -----------------------------
(1) The address for each is
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
CERTAIN TRANSACTIONS
On March 15, 1999, Donnebrooke issued 1,313,000 shares of its common stock to
Halter Capital Corporation which had paid certain debts of Donnebrooke owing to
Donnebrooke's creditors and 2,289,300 shares of its common stock to Kevin B.
Halter, Jr. for services which he had previously rendered as a consultant for
Donnebrooke.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time of the Shares by
the Selling Shareholders. Donnebrooke has registered the Shares for sale to
provide the Selling Shareholders with freely tradeable securities, but
registration of such securities does not necessarily mean that any of such
Shares will be offered or sold by the Selling Shareholders. Donnebrooke will not
receive any proceeds from the sale of these Shares by the Selling Shareholders.
The Shares may be sold from time to time directly by any of the Selling
Shareholders. Alternatively, the Selling Shareholders may from time to time
offer the Shares through agents or dealers, who may receive compensation in the
form of commissions from the Selling Shareholders and/or the purchasers for whom
they may act as agent. The Selling Shareholders and any agents or dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of Shares by them and
any commissions received by any such agents or dealers may be deemed to be
underwriting commissions under the Securities Act.
At the time a particular offering of Shares is made, a Prospectus Supplement, if
required, will be distributed that will set forth the names of any agents or
dealers and any commissions or other terms constituting compensation from the
Selling Shareholders and any other required information. The Shares may be sold
from time to time at varying prices determined at the time of sale or at
negotiated prices.
In order to comply with the securities laws of certain states, if applicable,
the Shares may be sold only through registered or licensed brokers or dealers.
In addition, in certain states, the Shares may not be sold unless they have been
registered or qualified for sale in such state or an exemption from such
registration or qualification is available and is complied with.
LEGAL MATTERS
The validity of the common stock covered by this registration statement will be
passed upon for Donnebrooke by Richard Braucher, attorney at law, Dallas, Texas.
11
<PAGE>
EXPERTS
The audited financial statements of Donnebrooke included in this prospectus and
elsewhere in the registration statement have been audited by S.W. Hatfield, CPA,
as indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm in giving said reports.
ADDITIONAL INFORMATION
Donnebrooke is currently subject to the reporting requirements of the Securities
and Exchange Act of 1934, as amended, and has in the past filed, and will
continue in the future to file, periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). You
may read and copy any of these reports at the following public reference rooms
maintained by the Commission :
In Washington, D.C. In New York, New York In Chicago, Illinois
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, N.Y. 10048 Chicago, IL 60661-2511
You may obtain information on the operation of the public reference rooms by
calling the Commission at 1-800-SEC-0330. You may also obtain coopies of this
information by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.C., Washington, D.C., 20549. The Commission also maintains an
internet website that contains these reports and information about issuers, like
Donnebrooke Corporation, who file electronically with the
Commission. The address of that site is http://www.sec.gov.
Donnebrooke has filed with the Commission a registration statement (including
exhibits and information which the Commission permits the registrant to omit
from this prospectus) on Form SB-2 under the Securities Act of 1933, as amended,
with respect to the common stock covered by this prospectus. Statements
contained in this prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement. You may obtain copies of the registration
statement, including exhibits and other information about Donnebrooke, by
contacting the Commission in the manner and at the addresses referenced above.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Donnebrooke's bylaws provide that Donnebrooke will indemnify its directors and
officers to the full extent authorized or permitted under Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or paid
by a director, officer or controlling person in connection with the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
12
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Financial Statements
Report of Independent Certified Public Accountants F-1
Balance Sheets
as of December 31, 1998, 1997 and 1996 F-2
Statements of Operations and Comprehensive Income
for the years ended December 31, 1998, 1997 and 1996
and for the period April 19, 1988 (date of inception)
to December 31, 1998 F-3
Statement of Changes in Stockholders' Equity
for the period from April 19, 1998 (date of inception)
to December 31, 1998 F-4
Statements of Cash Flows
for the years ended December 31, 1998, 1997 and 1996
and for the period April 19, 1988 (date of inception)
to December 31, 1998 F-7
Notes to Financial Statements F-8
Balance Sheets
as of March 31, 1999 and December 31, 1998 F-11
Statements of Operations and Comprehensive Income
as of March 31, 1999 and 1998 F-12
Statements of Cash Flows
as of March 31, 1999 and 1998 F-13
Notes to Financial Statements F-14
13
<PAGE>
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
TABLE OF CONTENTS
Page
Prospectus Summary 3
Risk Factors 3
Registration Plan 5
Description of Common Stock 5 DONNEBROOKE CORPORATION
Dividend Policy 5
Management's Discussion and
Analysis of Financial Condition
and Results of Operation 6 PROSPECTUS
Business 8
Directors and Officers 10
Principal and Selling Shareholders 10
Certain Transactions 11 3,602,300 Shares of
Plan of Distribution 11
Legal Matters 11
Experts 12
Additional Information 12 Common Stock
Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure 12 July ,1999
Disclosure of Commission
Position on Indemnification
for Securities Liabilities 12
Index to Financial Statements 13
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Other Expenses of Issuance and Distribution.
The estimated expenses of the registration, all of which will be paid by
Donnebrooke, are as follows:
SEC Filing Fee $11.00
Printing Expense $*
Accounting Fees and Expenses $*
Legal Fees and Expenses $*
Blue Sky Fees and Expenses -0-
TOTAL $*
* to be supplied by amendment.
Exhibits.
3.1 Articles of Incorporation of Donnebrooke*
3.2 Bylaws of Donnebrooke*
4.1 Specimen Stock Certificate for Common Shares*
5.1 Opinion of Richard Braucher, Esq.**
23.1 Consent of S.W. Hatfield, C.P.A.**
23.2 Consent of Richard Braucher, Esq.**
* previously filed
** filed herewith
Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(a) To include any prospectus required under Section 10(a)(3) of the
Securities Act.
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
nay material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be anew registration
statement relating tot he securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Donnebrooke
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and had duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Dallas, State of Texas, on the 29th day of June,
1999.
DONNEBROOKE CORPORATION
By: /s/ Kevin B. Halter June 29, 1999
--------------------------
Kevin B. Halter, President
and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Donnebrooke and each person whose signature appears below hereby designates and
appoints Kevin B. Halter as his attorney-in-fact (the " Attorney-in-Fact") with
full power to act alone, and to execute and in the name and on behalf of
Donnebrooke and each person, individually and in the capacity stated below, any
amendments (including post-effective amendments) to this Registration Statement,
which amendments may make such changes in this Registration Statement as the
Attorney-in-Fact deems appropriate, and to file each such amendment to this
Registration Statement together with all exhibits thereto and any and all
documents in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Kevin B. Halter June 29, 1999
- --------------------
Kevin B. Halter, President, Treasurer
and Chief Executive Officer
(Principal Executive, Financial and Accounting Officer)
/s/ Kevin B. Halter, Jr. June 29, 1999
- ------------------------
Kevin B. Halter, Jr., Vice President,
Secretary and Director
16
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We consent to the use in Form SB-2 Registration Statement under the Securities
Act of 1933 by Donnebrooke Corporation (a Delaware corporation) of our report
dated January 18, 1999 (except for Note D as to which the date is March 31,
1999) on the financial statements of Donnebrooke Corporation as of December 31,
1998, 1997 and 1996 and for each of the years then ended, accompanying the
financial statements contained in such Form SB-2 Registration Statement under
the Securities Act of 1933, and to the use of our name and the statements with
respect to us appearing under the heading "Experts".
/s/ S. W. Hatfield, CPA
-----------------------
S. W. Hatfield, CPA
(formerly S. W. Hatfield + Associates)
Dallas, Texas
June 28, 1999
EXHIBIT 23.2
CONSENT OF ATTORNEY FOR REGISTRANT
----------------------------------
The undersigned, as attorney for the registrant, Donnebrooke Corporation, hereby
consents to the use in the Form SB-2 Registration Statement under The Securities
Act of 1933, as amended, by Donnebrooke Corporation of the legal opinion
rendered by the undersigned and referenced therein and filed as an exhibit
thereto and the use of his name in said registration statement.
/s/ Richard Braucher
Dallas, Texas ------------------------
June 28, 1999 Richard Braucher, Esq.
17
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Donnebrooke Corporation
We have audited the accompanying balance sheets of Donnebrooke Corporation (a
Delaware corporation and a development stage company) as of December 31, 1998,
1997 and 1996 and the related statements of operations, changes in stockholders'
equity and cash flows for each of the three years then ended, respectively, and
for the period from April 19, 1988 (date of inception) through December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Donnebrooke Corporation (a
development stage company) as of December 31, 1998, 1997 and 1996, and the
results of its operations and its cash flows for each of the three years then
ended, respectively, and for the period from April 19, 1988 (date of inception)
through December 31, 1998, in conformity with generally accepted accounting
principles.
S. W. HATFIELD, CPA
(formerly S. W. HATFIELD + ASSOCIATES)
Dallas, Texas
January 18, 1999 (except for
Note D, as to which the
date is March 31, 1999)
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-1
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
BALANCE SHEETS
December 31, 1998, 1997 and 1996
1998 1997 1996
--------- --------- ---------
ASSETS $ -- $ -- $ --
========= ========= =========
LIABILITIES
Due to controlling shareholder $ 18,217 $ -- $ --
--------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock - $0.00001 par value
10,000,000 shares authorized; none
issued and outstanding -- -- --
Common stock - $0.00001 par value
50,000,000 shares authorized
38,072 issued and outstanding -- -- --
Additional paid-in capital 132,590 132,590 132,590
Deficit accumulated during
the development stage (150,807) (132,590) (132,590)
--------- --------- ---------
Total stockholders' equity (18,217) -- --
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ -- $ -- $ --
========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1998, 1997 and 1996
and Period from April 19, 1988 (date of inception) through December 31, 1998
Period from
April 19, 1988
(date of inception)
through
December 31,
1998 1997 1996 1998
--------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Revenues
Real estate management fees $ -- $ -- $ -- $ 41,253
--------- ------ ------ ---------
Expenses
General and administrative expenses -- -- -- 45,685
Reorganization and reactivation costs 18,217 -- -- 18,217
Amortization of organization costs -- -- -- 1,208
--------- ------ ------ ---------
Total expenses 18,217 -- -- 65,110
--------- ------ ------ ---------
Loss from operations (18,217) -- -- (23,857)
Other expenses
Loss on abandonment of fixed assets -- -- -- (126,950)
--------- ------ ------ ---------
Net loss (18,217) -- -- (150,807)
Other comprehensive income -- -- -- --
--------- ------ ------ ---------
Comprehensive loss $ (18,217) $ -- $ -- $(150,807)
========= ====== ====== =========
Loss per weighted-average
share of common stock
outstanding, calculated
on net loss - basic and fully diluted $ (0.48) nil nil $ (4.05)
========= ====== ====== =========
Weighted-average number
of shares of common
stock outstanding 38,072 38,072 38,072 37,207
========= ====== ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from April 19, 1988 (date of inception) through December 31, 1998
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of stock at formation
on April 19, 1988 16,000,000 $ 160 $ -- $ -- $ 160
Capital contributed to
support development -- -- 1,700 -- 1,700
Net loss for the period -- -- -- (1,728) (1,728)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1988 16,000,000 160 1,700 (1,728) 132
Shares issued during
the year 21,333,000 213 130,517 -- 130,730
Shares issued into
escrow pending
acquisition of
real estate 17,303,000 -- -- -- --
Net loss for the year -- -- -- (5,520) (5,520)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1989 54,636,000 373 132,217 (7,248) 125,342
Return of shares to
unissued status due
to non-performance
by the selling parties (17,303,000) -- -- -- --
Net loss for the year -- -- -- (124,633) (124,633)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1990 37,333,000 373 132,217 (131,881) 709
Net loss for the year -- -- -- (242) (242)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1991 37,333,000 $ 373 $ 132,217 $ (132,123) $ 467
=========== =========== =========== =========== ===========
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED
Period from April 19, 1988 (date of inception) through December 31, 1998
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at
December 31, 1991 37,333,000 $ 373 $ 132,217 $ (132,123) $ 467
Net loss for the year -- -- -- (242) (242)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1992 37,333,000 373 132,217 (132,365) 225
Net loss for the year -- -- -- (221) (221)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1993 37,333,000 373 132,217 (132,586) 4
Net loss for the year -- -- -- (4) (4)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1994 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1995 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1996 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1997 37,333,000 373 132,217 (132,590) --
Net loss for the year -- -- -- (18,217) (18,217)
---------- ---------- ---------- ---------- ----------
Balances at
December 31, 1998, as
originally presented 37,333,000 $ 373 $ 132,217 $ (150,807) $ (18,217)
========== ========== ========== ========== ==========
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED
Period from April 19, 1988 (date of inception) through December 31, 1998
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances at
December 31, 1998, as
originally presented 37,333,000 373 132,217 (150,807) (18,217)
Effect of one for 1,000
reverse stock split in
February 1999, including
effect of fractional share
rounding (37,294,928) (373) 373 -- --
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 1998,
as restated 38,072 $ -- $ 132,590 $ (150,807) $ (18,217)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
DONNEBROOKE CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1998, 1997 and 1996 and
Period from April 19, 1988 (date of inception) through December 31, 1998
Period from
April 19, 1988
(date of inception)
through
December 31,
1998 1997 1996 1998
------------ ------ ------ ----------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ (18,217) $ -- $ -- $(150,807)
Adjustments to reconcile net loss
to net cash provided by operating activities
Loss on abandonment of fixed assets -- -- -- 126,950
Amortization of organization costs -- -- -- 1,208
Payment of organization costs -- -- -- (1,208)
------------ ------ ------ ---------
Net cash used in operating activities (18,217) -- -- (23,857)
------------ ------ ------ ---------
Cash Flows from Investing Activities -- -- -- --
------------ ------ ------ ---------
Cash Flows from Financing Activities
Issuance of common stock -- -- -- 3,940
Cash advanced by controlling shareholder 18,217 -- -- 18,217
Capital contributed to support development -- -- -- 1,700
------------ ------ ------ ---------
Net cash used in financing activities -- -- -- 23,857
------------ ------ ------ ---------
Increase in Cash -- -- -- --
Cash at beginning of period -- -- -- --
------------ ------ ------ ---------
Cash at end of period $ -- $ -- $ -- $ --
============ ====== ====== =========
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ -- $ -- $ -- $ --
============ ====== ====== =========
Income taxes paid for the period $ -- $ -- $ -- $ --
============ ====== ====== =========
Supplemental Disclosure of
Non-cash Investing and
Financing Activities
Common stock exchanged for
office furniture and equipment $ -- $ -- $ -- $ 126,950
============ ====== ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE A - Organization and Description of Business
Donnebrooke Corporation (Company) was incorporated on April 19, 1988 as
Alluristics, Inc. under the laws of the State of Delaware. During 1989 and 1990,
the Company attempted to enter the business of owning, operating and managing
various parcels of real estate and to own, operate and manage shared tenant
service operations tailored predominately for the legal profession and related
professionals. The Company was unsuccessful in initiating these operations.
Accordingly, the Company has had no substantial operations or substantial assets
since inception. The current business purpose of the Company is to seek out and
obtain a merger, acquisition or outright sale transaction whereby the Company's
stockholders will benefit. The Company is not engaged in any negotiations and
has not undertaken any steps to initiate the search for a merger or acquisition
candidate.
Due to the lack of sustaining operations from inception, the Company is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$151,000. Accordingly, the Company is fully dependent upon its current
management and/or significant stockholders to provide sufficient working capital
to preserve the integrity of the corporate entity during this phase. It is the
intent of management and significant stockholders to provide sufficient working
capital necessary to support and preserve the integrity of the corporate entity.
During the fourth quarter, the Company has had paid on its behalf by management
and significant shareholders or has accrued various aggregate reorganization and
reactivation expenses of approximately $18,200 on behalf of the Company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Organization costs
Organization costs were amortized using the straight-line basis.
3. Income taxes
The Company files its own separate federal income tax return and uses the
asset and liability method of accounting for income taxes. Due to a
September 30, 1998 change in control involving in excess of 50.0% of the
outstanding common stock of the Company, the Company has no net operating
loss carryforwards available to offset financial statement or tax return
taxable income in future periods.
F-8
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE B - Summary of Significant Accounting Policies - Continued
4. Loss per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 1998, 1997 and 1996, the
Company had no outstanding warrants and/or options outstanding.
NOTE C - Related Party Transactions
For the period April 19, 1988 (date of inception) through December 31, 1988,
Halter Venture Corporation, the Company's initial former controlling
shareholder, provided office space and management services to the Company for an
aggregate fee of $1,700.
During the fourth quarter of 1998, the Company had paid on its behalf or accrued
approximately $14,600 in expenses for stock transfer and electronic document
filing services to an entity related to an officer and controlling shareholder
of the Company.
NOTE D - Subsequent Events
In January 1999, the Company circulated a proxy statement for a Special Meeting
of Shareholders to be held on February 16, 1999. The principal purpose of this
meeting was to elect two directors to serve until the next Annual Meeting of
Shareholders and approved an amendment to the Company's Certificate of
Incorporation to effect a one for one thousand (1 for 1,000) reverse split of
the Company's issued and outstanding common stock and to reduce the number of
Authorized Shares from one billion (1,000,000,000) to fifty million.
(50,000,000). There was no change to the stated par value of the Company's
common stock in this proposal.
In February 1999, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to effect a one (1) for one thousand
(1,000) reverse stock split of the issued and outstanding shares of the
Company's common stock and to reduce the number of authorized shares from one
billion (1,000,000,000) to fifty million (50,000,000). The effect of the reverse
split is reflected in the accompanying financial statements as if the reverse
split had occurred on the first day of the earliest period presented.
In March 1999, the Company filed an Amended and Restated Certificate of
Incorporation with the State of Delaware. This amendment changed the Company's
capital structure to eliminate all references to preferred stock and reduced the
number of common shares authorized from 1,000,000,000 of $0.00001 par value to
50,000,000 shares of $0.00001 par value.
F-9
<PAGE>
DONNEBROOKE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D - Subsequent Events - Continued
In March 1999, the Company issued an aggregate 3,602,300 shares of common stock,
pursuant to a Form S-8, Registration Statement under The Securities Act of 1933,
to a controlling shareholder and an affiliated individual, who is an officer and
director of the Company, in settlement of expenses paid or accrued on behalf of
the Company for various consulting, reorganization, stock transfer and
electronic document filing services. This transaction was valued at an aggregate
of approximately $36,000, which equaled the respective invoiced amounts paid or
accrued on behalf of the Company by the respective related parties. Of the
aggregate amount, approximately $19,000 was for services paid or accrued on the
Company's behalf by an entity related to the individual who is an officer and
director of the Company.
(Remainder of this page left blank intentionally)
F-10
<PAGE>
<TABLE>
<CAPTION>
Donnebrooke Corporation
(a development stage enterprise)
Balance Sheets
March 31, 1999 and December 31, 1998
(Unaudited) (Audited)
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets $ -- $ --
============ ============
Liabilities
Due to controlling shareholder -- 18,217
------------ ------------
Stockholders' Equity
Common stock - $0.00001 par value 50,000,000
shares authorized. 3,640,372 and 38,072 shares
issued and outstanding, respectively 36 --
Additional paid-in capital 168,577 132,590
Deficit accumulated during
the development stage (168,613) (150,807)
------------ ------------
Total stockholders' equity -- (18,217)
------------ ------------
Total Liabilities and Stockholders' Equity $ -- $ --
============ ============
</TABLE>
F-11
<PAGE>
Donnebrooke Corporation
(a development stage enterprise)
Statements of Operations and Comprehensive Income
Three months ended March 31, 1999 and 1998
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1999 1998
Revenues $ -- $ --
--------- ---------
Expenses
General and administrative expenses 17,806 --
--------- ---------
Net Loss -- --
Other Comprehensive Income -- --
--------- ---------
Comprehensive Loss $ (17,806) $ --
========= =========
Loss per weighted-average share
of common stock outstanding,
computed on net loss - basic and
fully diluted $ (0.02) nil
========= =========
Weighted-average number
of shares of common stock
outstanding - basic and fully diluted 718,506 38,072
========= =========
F-12
<PAGE>
<TABLE>
<CAPTION>
Donnebrooke Corporation
(a development stage enterprise)
Statements of Cash Flows
Three months ended March 31, 1999 and 1998
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net loss for the period $ (17,806) $ --
Adjustments to reconcile net loss
to net cash provided by operating
activities
Common stock issued for consulting services 17,806 --
------------ --------
Net cash used in operating activities -- --
------------ --------
Cash flows from investing activities -- --
------------ --------
Cash flows from financing activities -- --
------------ --------
Increase (decrease) in cash -- --
Cash at beginning of period -- --
------------ --------
Cash at end of period $ -- $ --
============ ========
Supplemental disclosure of interest and income taxes paid
Interest paid for the period $ -- $ --
============ ========
Income taxes paid (refunded) for the period $ -- $ --
============ ========
Supplemental disclosure of non-cash
investing and financing activities
Amounts due to controlling shareholder
settled with the issuance of common stock $ 18,217 $ --
============ ========
</TABLE>
F-13
<PAGE>
Donnebrooke Corporation
(a development stage enterprise)
Notes to Financial Statements
Note 1 - Basis of Presentation
During interim periods, Donnebrooke Corporation (Company) follows the accounting
policies set forth in its Annual Report Pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K as filed with the U. S. Securities and
Exchange Commission. The December 31, 1998 balance sheet data was derived from
audited financial statements of Donnebrooke Corporation, but does not include
all disclosures required by generally accepted accounting principles. Users of
financial information provided for interim periods should refer to the annual
financial information and footnotes contained in the Annual Report Pursuant to
Section 13 of the Securities Exchange Act of 1934 on Form 10-K when reviewing
the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-Q, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 1999.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Note 2 - Summary of Significant Accounting Policies
1. Cash and cash equivalents
The Company considers all cash on hand and in banks, certificates of
deposit and other highly-liquid investments with maturities of three months
or less, when purchased, to be cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Loss per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of March 31, 1999 and 1998, the Company
had no outstanding warrants and/or options outstanding.
F-14
<PAGE>
Donnebrooke Corporation
(a development stage enterprise)
Notes to Financial Statements - Continued
Note 3 - Common Stock Transactions
In February 1999, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to effect a one (1) for one thousand
(1,000) reverse stock split of the issued and outstanding shares of the
Company's common stock and to reduce the number of authorized shares from one
billion (1,000,000,000) to fifty million (50,000,000). The effect of the reverse
split is reflected in the accompanying financial statements as if the reverse
split had occurred on the first day of the earliest period presented.
In March 1999, the Company filed an Amended and Restated Certificate of
Incorporation with the State of Delaware. This amendment changed the Company's
capital structure to eliminate all references to preferred stock and reduced the
number of common shares authorized from 1,000,000,000 of $0.00001 par value to
50,000,000 shares of $0.00001 par value.
In March 1999, the Company issued an aggregate 3,602,300 shares of common stock,
pursuant to a Form S-8, Registration Statement under The Securities Act of 1933,
to a controlling shareholder and an affiliated individual, who is an officer and
director of the Company, in settlement of expenses paid or accrued on behalf of
the Company for various consulting, reorganization, stock transfer and
electronic document filing services. This transaction was valued at an aggregate
of approximately $36,000, which equaled the respective invoiced amounts paid or
accrued on behalf of the Company by the respective related parties. Of the
aggregate amount, approximately $19,000 was for services paid or accrued on the
Company's behalf by an entity related to the individual who is an officer and
director of the Company.
F-15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000843494
<NAME> Donnebrooke Corporation
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (18217)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 18217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (18217)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18217)
<EPS-BASIC> (0.48)
<EPS-DILUTED> (0.48)
</TABLE>
